The chart below depicts Kazakh fuel demand in 2021. LPG regularly constitutes about 50,000 b/d of Kazakhstan’s fuel demand, with gasoline and diesel each accounting for about 80,000-120,000 b/d of total demand. ESAI forecasts that demand for each fuel increased in December, largely due to seasonal factors and restrictions on international travel, which spur demand for domestic transportation. However, total fuel demand is likely to fall in January, as reduced domestic travel in January due to counter-protest restrictions imposed by the government dampen demand for LPG and gasoline.
On January 1, the Kazakh government lifted price controls on LPG, arguing that the $0.11/liter cap forced domestic producers to sell below cost. Within one day, LPG prices had doubled to $0.27/liter. This strained the poorer areas in western Kazakhstan, where an estimated 70-90 percent of vehicles have been converted to run on LPG, which was cheaper than gasoline due to the price cap.
Protests began on January 2 in the oil-rich Mangystau Province in western Kazakhstan, and have since spread to Almaty and Nur-Sultan. On Tuesday, local authorities reported attacks on banks, stores and vehicles following mass protests in Almaty, and a state of emergency has been declared in Almaty and Mangystau. Yesterday, President Tokayev demanded the reinstatement of the LNG price cap, as well as price controls for gasoline and diesel, but protests have continued to escalate. Tokayev’s cabinet resigned this morning.
Kazakhstan produces more than 1.5 million b/d of crude oil and another 300,000 b/d of condensate. Some of this output could be at risk if further protests and government restrictions, temporarily disturb crude production and refining activity in January. Large protests have been reported at a Tengizchevroil worker camp in Atyrau, although the company reports that production operations remain unaffected. In the long run, prolonged protests could also affect Kazakhstan’s reputation as a politically stable country for foreign investment, especially if production or refining operations are impacted by the protests or government response.